Case Note & Summary
The appellant, Bharatbhai Parsotambhai Bhanushali, was the original claimant in a motor accident claim petition (MACP No.578 of 2019) before the Motor Accident Claims Tribunal, Nadiad. He sustained injuries in a road accident on 11.12.2018 when his motorcycle was hit from behind by a motorcycle bearing registration No. GJ-7-CN-5544, driven by respondent No.1 Dineshbhai Khodabhai Raval in a rash and negligent manner. The appellant suffered a fracture in his right wrist and other injuries, and claimed compensation of Rs.3,00,000/-. The Tribunal passed an award on 03.01.2022 but exonerated respondent No.2, the insurance company, on the ground that the driver of the offending motorcycle did not hold a valid driving licence at the time of the accident. The appellant appealed against this exoneration. The High Court considered the legal issue of whether a third-party claimant can be denied compensation due to breach of policy condition by the insured. The Court relied on the Supreme Court's decision in National Insurance Co. Ltd. vs. Swaran Singh, (2004) 3 SCC 297, which held that even in case of breach of policy conditions, the insurer is liable to pay compensation to a third party and can then recover the amount from the insured. The Court allowed the appeal, set aside the Tribunal's order exonerating the insurance company, and directed the insurance company to pay the compensation amount to the appellant and then recover it from the owner of the offending vehicle.
Headnote
A) Motor Accident Claims - Third Party Claim - Breach of Policy Condition - Pay and Recover - The issue was whether the insurance company could be exonerated from liability to pay compensation to a third-party claimant on the ground that the driver of the offending vehicle did not hold a valid driving licence. The Court held that the claimant, being a third party, has nothing to do with the breach of policy condition by the insured. Following the decision in National Insurance Co. Ltd. vs. Swaran Singh, (2004) 3 SCC 297, the Court directed the insurance company to pay the compensation to the claimant and then recover the same from the owner of the offending vehicle. (Paras 4-5)
Issue of Consideration
Whether the insurance company can be exonerated from liability to pay compensation to a third-party claimant on the ground that the driver of the offending vehicle did not hold a valid driving licence at the time of the accident.
Final Decision
The appeal is allowed. The judgment and award dated 03.01.2022 passed by the Motor Accident Claims Tribunal, Nadiad in MACP No.578 of 2019 is set aside to the extent of exoneration of respondent No.2 insurance company. The insurance company is directed to pay the compensation amount to the appellant and then recover the same from the owner of the offending vehicle in accordance with law.
Law Points
- Third-party claimant cannot be denied compensation due to breach of policy condition by insured
- Pay and recover principle
- Insurer liable to pay compensation to third party even if driver had no valid driving licence
